Investing.com -- Wolfe Research remains optimistic about the internet sector in 2025, noting opportunities in mega-cap stocks such as Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), Uber (NYSE:UBER), and Chewy (NYSE:CHWY), their top picks.
While the firm acknowledges a tempered performance compared to the past two years, analysts see potential upside driven by product catalysts, healthy macro conditions, and attractive valuations.
Amazon remains a top pick due to its diversified growth drivers, according to the firm.
Wolfe Research highlighted "upside to retail margins" from operational efficiency, automation, and ad revenue growth. Additionally, they believe Amazon Web Services (AWS) continues to show strong revenue growth fueled by AI demand. Wolfe projects international profitability and market share consolidation to further bolster the company’s outlook.
For Meta Platforms, Wolfe emphasized monetization opportunities, including its Threads platform, which could contribute low single-digit billions, with monetization starting in 2025.
The firm argues that Meta's cleaner AI narrative and potential EPS upside from a TikTok divestiture further solidify its position. However, the analysts flagged risks associated with Meta’s anticipated $58 billion CapEx for 2025, higher than Street expectations.
Uber is seen as a "controversial pick" due to sentiment-driven dislocation. Wolfe highlighted Uber's undervaluation relative to peers and upside potential in both its Mobility and Delivery segments.
The firm also sees promise in Uber’s advanced autonomous vehicle (AV) efforts, noting that "Waymo remains the only AV with scaled potential" in the near term.
Chewy was upgraded to Outperform, with Wolfe citing customer growth, product catalysts, and international expansion. Analysts expect Chewy’s subscription-like model, driven by Autoship and pet health products, to fuel mid-to-high single-digit net sales growth over the next two years.
In contrast, Wolfe downgraded Bumble (NASDAQ:BMBL) to "Peer Perform," citing execution risks and rising competition.